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TCS delivered a USD revenue miss in the seasonally strong quarter led by softness in core verticals and weaker traction in developed markets. However, strong EBIDTA margins and higher other income led to PAT beat our estimates by 4.5%. Tepid traction in developed markets in the seasonally strong quarter (UK down 0.1% QoQ in cc, North America up 1.4% in cc) is key negative. Core verticals( BFSI, Retail, CPG) stumbled owing to weak discretionary spend and delay and postponement in decision making . While TCS cited that 2HFY17 could relatively be better than 2HFY16, we believe that this still doesn’t suffice to compensate for the 2Q revenues miss. We downgrade our USD revenue growth estimate to 7.2% for FY17 (vs 10.5% modelled earlier). This is led by steep 2Q revenues miss and cross currency woes. We revise our EPS estimates to Rs 133.5/144.5/sh which represents a 0.6/3.6% downgrade in our estimates. Our earnings cut is predominantly led to downgrade in USD revenue growth assumptions. Our TP is revised lower by 4% to Rs 2530/sh (17.5x FY18E EPS) led by earnings downgrade. Maintain Hold.

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